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Taiwanese LCD Firms Get Boost from Japan
Nov 28, 2005
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With demand growing for low-cost, slim-screen LCD-TVs, Japanese firms are now turning to Taiwanese panel-makers.

Taiwanese LCD panel makers' massive capacity expansion may pay off as more Japanese television brands, including Sharp, are buying Taiwanese-made panels to satisfy booming demand for flat-screen TVs, analysts said.

In the past, Japanese companies rarely bought large-sized LCD screens from Taiwanese LCD makers, out of concerns about quality. But analysts say that's changing as local companies' technology improves and consumer appetite for LCD-TVs increases. "It was natural for Japanese firms to turn to local companies for TV panel supplies in order to save cost and reduce risk [of investing in the highly cyclical LCD industry]," Morgan Stanley analyst Frank Wang said.

Sharp, the world's top LCD-TV vendor with an 18-percent market share, is one Japanese company that's now buying Taiwanese screens. Wang said Sharp is purchasing LCD screens 32 inches and smaller from Taiwan's Quanta Display Inc., which also supplies the Japanese company with slim screens used in computer displays. Sharp is currently the only Japanese company that owns LCD panel factories. It is boosting production at a so-called "sixth-generation" plant in Kameyama, in western Japan, and building an even more advanced eighth-generation plant at the same site.

Taiwanese LCD panel makers led by AU Optronics Corp are on track to produce 40 percent of the world's LCD-TV screens, just behind their Korean rivals, according to researcher DisplaySearch's forecast. In the past 6 years, Taiwanese companies have poured around NT $800 billion (approx. U.S. $23.8 billion) into building LCD factories.

Commenting on a report in a Chinese-language newspaper that Japan's Matsushita Electric Industrial Co, which sells consumer electronics under the Panasonic brand name, plans to purchase flat panels from Taiwanese companies, Wang said only time will tell if that's true. "But, generally speaking, Japanese companies will make a greater contribution to Taiwanese LCD panel suppliers. Their purchases will also help ease oversupply pressure," Wang said.

Like most Japanese companies, Matsushita Electric Industrial has focused on making plasma-display-panel TVs and stopped investing in plants for screens using the rival LCD technology. Now, Matsushita has no LCD plant of its own and must buy slim screens from Korean or Taiwanese companies.

Matsushita Electric Industrial is the world's biggest plasma TV brand with a 35 percent market share, according to DisplaySearch. If Matsushita does order LCD screens from Taiwanese makers, it would likely do so in large volumes, according to Ken Yu, an analyst with SinoPac Securities Corp. Matsushita Electric Industrial is on track to seize a 6-percent share of the world's total LCD-TV market, DisplaySearch said. (Taipei Times)

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